The premise: What companies project or "sell" to the outside isn't always how they operate on the inside--especially where their employees are concerned.

Jeff: Lots of companies say what they do best is listen to their customers... but if the owner doesn't listen to his employees, I guarantee those employees aren't listening to customers.

As an employee you act the way you're treated, especially in a small business.

Jim: The nut of the problem, whether you run a huge company or a small company, is that you feel your job is to make decisions, move ahead, and get people to execute. Being decisive is positive. That's what leaders do. So when someone questions your judgment, it's painful.

Jeff: No doubt. I once moved 30 employees to a different shift. I thought it was a good business decision but of course it changed their personal lives completely.

So they complained. I thought I was right and didn't really listen because I was caught up in the "I'm in charge" thing. A couple months later I realized they were right and I moved them back.

Jim: The most basic thing you do as a leader is get people to do what you want them to do. That's an extremely limited view of leadership, though; if that's all you accomplish, you'll spend all your time supervising and directing.

Now if you can get people to think the way you think, then you can turn them loose. Certainly that's better.

But when employees believe in what you're doing, as a leader and as a business, they'll walk through walls because now it's no longer about you--it's about them.

Jeff: That's like the sports analogy, where belief and a sense of shared purpose often trump talent. But how do you get employees to believe? Billion dollar question.

Jim: There are incredibly inspiring leaders who are so eloquent and brilliant that people follow, but there are very few of those... and even fewer who can keep doing that.

Let's be honest, after people work with you for a while, charisma fades. Even successful coaches eventually leave a team because they feel the players have stopped listening to the same message.

Jeff: And if you are incredibly charismatic, once the power of vision or inspiration fades, then what? If you're a small business owner, you're it: You can't bring in Phil Jackson to take your team to the next level.

Jim: At Red Hat the employees are the inspiration. A key job of the leadership team is to support that inspiration.

Jeff: To some small business owners that sounds more like a democracy, and many started their own businesses just so they could make their own decisions.

Jim: It's not a democracy. It's a meritocracy. To engage people, you listen to them and make sure the best ideas win.

Take Memo List, Red Hat's in-house communication tool. Basically it's just a giant email list where every employee is subscribed. Everyone can give feedback, share ideas, criticize ideas... just like with open-source software, the best ideas rise to the top. Problems are brought to light and other people can jump in to make suggestions and add detail.

Jeff: That sounds good, but you're left with the age-old management problem. Eventually, someone has to say yes or no, and if I've raised an idea I feel strongly about it doesn't feel good when my idea gets shot down, especially by someone whose opinion is more "important" because they're higher up the ladder.

Jim: Keep in mind the idea isn't that people get to vote on decisions. Our social contract is that if you post a concern we will give you a thoughtful response: yes or no, and most importantly why. If you have a concern about something, it's addressed.

Soliciting feedback is important, but responding to feedback is more important.

Again, a meritocracy isn't a democracy. A meritocracy allows smart people to act on smart input from other smart people. That makes the business better and also generates a huge side benefit: Thoughtful people who like to be engaged want to work for companies who listen.

It's like what pilots say to passengers: We know you have options, and if you're smart and passionate and want to make things better, we're glad you chose to work with us.

Jeff: I was on the wrong end of that once. There was a suggestion system and if your idea saved the company money you got 25% of the first-year savings. I turned in 20 pages of ideas including details for how to implement each one. After about three months my supervisor finally got back to me and said, "These are all great, but there's no way we can pay you the $40,000 you would get. That would set a precedent we don't want to set. So we'll give you the maximum award for a non-tangible benefit: $300."

Imagine my delight.

Even if money isn't an issue, suggestions are still problematic. I was on a consulting gig in a manufacturing plant and an employee slipped me a list of ideas. I scanned it and said, "Hey, these are great--why don't you give them to your supervisor and get the credit?" He said, "If it's not his idea it must suck. Maybe they'll listen to you."

Jim: Sometimes as a leader your idea isn't so great either. We changed our healthcare provider in Boston for what we thought were all the right reasons, but on Memo List we learned hundreds of things we hadn't considered.

So we changed the decision.

Jeff: All that input is no doubt valuable, but when you really open things up it can be tough to find the time to deal thoughtfully with all the suggestions and input you can get. I put in a process improvement feedback system once and was absolutely flooded with ideas... it was great, but there were times I felt so overwhelmed I thought, "What the heck have I done?"

Jim: That's true, but the coolest thing about a completely open feedback tool is the stuff you don't have to do. For example, our Raleigh offices are at capacity so if someone parks across two parking spaces someone will take a picture, post it on Memo List, and say, "Come on." Or if a conference room is left in a mess someone will take a picture, time stamp it, and post it.

That stuff really makes a difference. People much prefer to self-police than to be policed.

Jeff: I would think it could also get really out of hand. When I worked on the shop floor I can only imagine what some of my coworkers and I would have done with an open system like that. We weren't exactly models of propriety.

Jim: Sure. At one point Memo List did start to get a little off track. There were hundreds of emails a day, some were just funny or conversational, others were a little rude... and I started to feel it was no longer serving its full purpose. So I said, "I think we need a set of rules."

Immediately other people said, "No way. You can't set the rules. If the CEO or an executive sets the rules for something intended to be open, no one will use it anymore." So we gathered together the 10 people who tended to post the most and shared our concerns. They came back and said, "Let's create a Friday List for fun stuff and for getting to know each other in a less formal way. And if someone gets too rude, we'll self-police it."

That was a good lesson. We knew we needed a solution but we let smart, engaged people actually solve it. We didn't tell them how.

Jeff: The big challenge for some small business owners who want to implement a similar system would be dealing with some of the ideas--or criticism--that would naturally result... and being willing to let go of some of their control over how their company is run.

Plus it can be painful. I once asked a group of employees what they would do differently if they were me. I walked out an hour later feeling like the worst manager in the world.

Jim: You absolutely need a thick skin, but if you're willing to take a little criticism--criticism that is being leveled at you anyway, just out of your earshot--all that dialogue makes your decisions better and makes execution a lot better. When employees are involved and feel they have been heard they are much more likely to execute well.

Take the big firms that bring in change management specialists. "Change management" is like advertising, and we're so flooded with advertising we're all great at tuning it out. But if you do your change management while you're making the decision, by letting employees help create that decision, then you don't need change management. You don't need to convince people.

Change management is what you do to employees; when employees participate, change is what they do for the company and for themselves.

Jeff: An open culture was already in place when you got to Red Hat. You were at Delta Airlines, a company I imagine was fairly buttoned-up. I bet that was a culture shock.

Jim: I inherited a wonderful organization.

It sounds corny, but your mother is right: It's better to share. If I have an apple and you have an apple and we exchange apples, we each still have an apple. If I have an idea and you have an idea and we exchange ideas, now we both have two ideas.

An open culture adds real value for customers and makes this a great place to work. We have fiercely loyal employees; some even have Red Hat tattoos.

Our people are passionate about what they do because there's a fundamental good in open source--both outside the company and inside.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.